When working a full-time job, you typically only need to worry about hiring tax services when the time comes to file a tax return. For freelancers, however, there are unique tax issues to be aware. By understanding your tax responsibilities and enlisting the help of a tax services professional, you can avoid making a costly mistake as you begin working for yourself.

Tax Basics for New Freelancers

1. Quarterly Estimated Tax Payments

Rather than having taxes taken out of each paycheck, freelancers must pay estimated taxes four times a year. Keep in mind that underpaying will require an extra payment when filing your annual return. Working with a tax services provider will make it easier to determine what your quarterly payment should be.

2. Self-Employment Taxes

Because freelancers are essentially their own bosses, they don’t take Social Security and Medicare out of their paychecks. Freelancers are also considered to be both employers and employees. Because of this, freelancers are subjected to a self-employment tax of 15.3% in addition to income tax. To prepare to cover this bill, take this percentage out of every freelance check you receive.

3. Deductions

Bookkeeping is extremely important for freelancers—not just for tracking their income, but also for tracking deductible expenses. These deductions can significantly reduce your tax liabilities. Costs such as advertising, office supplies, work-related travel, and computer equipment are all deductible. Even your home office is deductible. Detailed documentation is vital if you wish to claim these and other deductions.

If you’re a freelancer in need of a CPA, be sure to call Tostrud & Temp. Serving La Crosse County, WI, for over 35 years, their specialized team will provide accurate work that helps you navigate your tax responsibilities. To learn more about their tax services, visit them online or call (608) 784-8060.